Update: The top chart below is an updated version of the chart below, with the new chart based on unemployment rate data for September from Global Financial Data (paid subscription required). As you can see the data in both charts are almost identical, and the individual jobless rates and the main results (medians, averages) don’t change. The bottom chart was criticized because Wikipedia was used as the data source, which I used for the original chart because it was the most convenient data source available. After receiving criticism for using Wikipedia, I spent some time retrieving data for each of the 18 countries from Global Financial Data and present that new chart below. The jobless rates in the new chart are all for September 2013, which might be more recent than some of the monthly jobless rates reported by Wikipedia. But overall, the Wikipedia data for the original chart were really pretty accurate.
New Chart (Source: Global Financial Data):
Old Chart (Source: Wikipedia):
On the Cafe Hayek blog yesterday, Don Boudreaux pointed to a post on the Money Illusion blog, where Scott Sumner presented some data on the minimum wage and jobless rates in the 18 countries in Western Europe. Those data are summarized in the table above (data here for minimum wages and here for jobless rates) and confirm what Scott reported, which is that the average and median jobless rates for the nine Western European countries with a minimum wage are twice as high as the average and median jobless rates for the nine countries without a minimum wage.
Bottom Line: The nine countries in Western Europe with a minimum wage of $0.00 per hour, which most economists and even the New York Times argued in 1987 is the “right” wage, are apparently doing much better economically than the nine countries that have
minimum wage laws legislation that makes it unlawful to employ workers whose hourly productivity is below some minimum level arbitrarily dictated by government officials. (Thanks to Don Boudreaux for making that clarification.)
There have been various comments on minimum wage posts here and elsewhere from minimum wage proponents who argue that other countries have minimum wage laws apparently without any adverse consequences on employment levels or jobless rates. The empirical evidence from Western Europe seems to suggest otherwise. Labor markets in the group of countries with no minimum wage laws are much healthier and doing much better than the group of countries with minimum wage legislation, measured by the jobless rates in Western Europe.
As Scott Sumner asks of minimum wage supporters, “Still want to raise our minimum wage to $10?”